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A production possibilities frontier that illustrates
the production of cars and computers shows the
opportunity cost of computers measured in
terms of cars.
A. True
B. False
A circular flow diagram shows how
dollars flow through financial markets
among households and firms.
A. True
B. False
Positive statements are prescriptive
and cannot be confirmed or refuted by
examining the evidence.
A. True
B. False
In a circular flow diagram, decisions
are made by
A. Households and firms. Firms are
sellers in the markets for goods and
services; households are buyers in
the markets for goods and services.
B. Individuals and government.
Individuals are sellers in the markets
for goods and services; the
government is a buyer in the
markets for goods and services.
C. Households and firms. Firms are
buyers in the markets for goods and
services; households are sellers in
the markets for goods and services.
D. Individuals and government.
Individuals are buyers in the markets
for goods and services; the
government is a seller in the
markets for goods and services.
Which of the following examples does not
correctly describe the movement of $10 through
a circular flow diagram?
A. A firm sells a hat for $10. The firm uses the
$10 to hire another employee. The
employee uses $10 of her wages to pay her
cell phone bill.
B. An individual works for a firm for $10 per
hour editing textbooks. The firm sells a
textbook to a consumer.
